China Steel Corporation March 16, 2016

0

1

•Company Overview 2

•Performance 6

•Financial Review 10

•EPS & Dividends (common stock) 11

•Sales 12

•Strategy 14

Table of Contents

Leading manufacturer of flat steel products

Continuously upgrading towards higher value-added products

Dominant position in the domestic market

Continue to capture rapid growth in South East Asia and China markets

2

Company overview: Business snapshot (CSC standalone)

Overview

Leading Taiwanese steel manufacturer with integrated production capabilities

Headquartered in Kaohsiung with major production sites located in Kaohsiung

Annual capacity of 9.9 mmt as of Dec 31, 2015

Major business

Steel Sales revenue breakdown by products

(2015)

Domestic/Export by revenue (2015)

Domestic 66%

Export 34% Hot Rolled,

22%

Cold Rolled, 38%

Wire Rod, 16%

Plate, 10%

Bar, 9% Billet/Slab,

5%

24%

57% 62% 63% 62%

26%

84% 38%

16% 20%

Hot- Galvanized

Steel

Bar/Rod Electro- Galvanized

Plate Cold-rolled Hot-rolled Electrical Steel

CSC Dragon Steel Chung Hung 3

Company overview: Business snapshot (CSC Group)

Steel Core Businesses

Engineering Businesses

China Steel Machinery Corporation

China Steel Structure Co., Ltd.

China Ecotek Corporation

Info-Champ Systems Corporation

Industrial Materials Businesses

C. S. Aluminum Corporation

China Steel Chemical Corporation

CHC Resources Corporation

Himag Magnetic Corporation

China Steel Precision Materials

China Steel Resources Corporation

CSC Precision Metal Industrial Corporation

Logistic Businesses

China Steel Express Corporation

China Steel Global Trading Corporation

China Steel Precision Metals Qingdao Co., Ltd.

United Steel Engineering and Construction Co.,

Ltd (Kunshan coil center)

Service and Investments Businesses

Gains Investment Corporation

China Steel Security Corporation

China Prosperity Development Corporation

China Steel Management Consulting Corporation

CSC Group domestic market share (2015)

Our group crude steel capacity reached 16.1 mmt in 2015(combining China Steel Corporation and Dragon Steel’s EAF and No.1&2 blast furnace).

Capacity & market share

Major business

China Steel Corporation

Chung Hung Steel

Corporation

Dragon Steel Corporation

CSC Steel Sdn. Bhd.

China Steel Sumikin Vietnam

(CSVC )

China Steel Corporation India

Pvt. Ltd (CSCI)

78% 84%

Other Group Businesses

4

Company Overview: Awards and Honours

1 • 2016.01 CSC was ranked as RobecoSAM 2016 Steel Industry Silver Class Sustainability leaders.

2 • 2015.12 Green Enterprise Award, British Standards Institution.

3

• 2015.11 CSC received “Ten Most Sustainable Company Award”, ”Taiwan Top 50 Corporate Sustainability Report Award”, ”Growth through Innovation Award”, “Climate Leadership Award”, and ”Sustainable Water Management Award” by TAISE.

4

• 2015.11 CSC was included in CDP ‘s 2015 Climate Disclosure Leadership Index for Hong Kong and South East Asia region and received the highest disclosure score among all Taiwanese companies.

5

• 2015.08 CSC was ranked 10th among large enterprises in the ”Excellence in Corporate Social Responsibility Award” by Common Wealth magazine.

6 • 2015.01 CSC was ranked as RobecoSAM 2015 Steel Industry Bronze Class Sustainability leaders.

7 • 2014.12 Sustainable Governance Award, British Standards Institution.

5

Company overview: Group capacity & Production lines

9.9 9.9 9.9 9.9 9.9 9.9

1.0 1.0 1.0 1.2 1.2 1.2

2.0 2.5 2.5

5.0 5.0 5.0

2010 2011 2012 2013 2014 2015

Dragon Blast Furnace Dragon Electric Arc Furnace China Steel

Crude steel capacity (mmt)

Group capacity Commencement of new capacity/production lines: CSC group

MAY 2015

CSCI

Project

FEB 2010

#1 BF

JUL 2010

HSM

MAR 2013

#2 BF

MAY 2011

#3 CR Mill / #3 CGL

(1.2 mmt)

(1.5 mmt)

(2.5 mmt)

(3 mmt)

(0.2 mmt)

(2.5 mmt)

Q1 2013

HSM

Expansion

(3 mmt → 4 mmt)

(0.15 mmt)

APR 2014

NGO Line

OCT 2013

CSVC Project

6

Performance- Consolidated operating results

Item *2015 *January 2016

Consolidated Operating Revenue 285,054 22,238

Consolidated Operating Income 8,116 -463

Consolidated Income

Before Income Tax 9,506 -318

Amount: NT$ million

*preliminary result

7

Performance-Sales Revenue Breakdown

Item 2015 January 2016

1 Steel products 225,756,158 17,055,850

2 Non-steel industry

materials 31,316,057 2,437,882

3 Construction 18,147,093 2,184,564

4 Transportation and service 6,718,949 445,252

5 Others 3,142,279 114,580

Less Sales returns and

allowances 0 0

Total 285,080,536 22,238,128

Unit：NTD Thousands

2015. 1~3Q Steel Others Adjustment &

Elimination Total

Revenues from external

customers $ 175,028,527 $ 47,031,528 $ - $ 222,060,055

Inter-segment revenues 39,816,519 31,714,026 ( 71,530,545) -

Segment revenues $ 214,845,046 $ 78,745,554 ($ 71,530,545) $ 222,060,055

Segment profit $ 7,230,851 $ 5,779,827 ($ 1,843,313) $ 11,167,365

Interest income 190,568 180,102 ( 56,843) 313,827

Financial costs ( 2,537,076) ( 273,344) 33,193 ( 2,777,227)

Share of the profit of

associates 2,772,331 919,687 ( 3,573,983) 118,035

Other non-operating income

and expenses 2,926,033 704,037 ( 550,450) 3,079,620

Profit before income tax 10,582,707 7,310,309 ( 5,991,396) 11,901,620

Income tax 2,151,784 652,956 ( 155,037) 2,649,703

Net profit for the period $ 8,430,923 $ 6,657,353 ($ 5,836,359) $ 9,251,917

Performance-CSC group

Segment revenues and operating results

Unit：NTD Thousands

8

9

Performance- consolidated basis

Units: NT$ millions

Consolidated Income Statement

IFRSs

2014.3Q 2015.3Q 2014.1~3Q 2015.1~3Q

Revenues 92,268 67,694 276,846 222,060

Gross profit 12,033 4,205 30,568 21,327

Gross margins 13.04% 6.21% 11.04% 9.60%

Profit before tax 8,564 1,295 20,242 11,902

Net profit 7,114 1,141 17,075 9,252

Attributable to

Owners of the corporation 6,613 744 15,380 9,120

Non-controlling interests 501 397 1,695 132

10

Performance: financial review (Consolidated Basis)

Units: NT$ millions

＊ Net debt = debt – cash & cash equivalents – ( financial assets at fair value through profit or loss-current+ available-for-sale financial assets-current +held-to-maturity financial assets-current+ derivative

financial assets for hedging-current)

12/31/2010 12/31/2011 12/31/2012 12/31/2013※ 9/30/2015※

Debt 255,206 299,578 312,393 362,630 362,475

Debt/Equity 88.43% 95.99% 102.26% 113.55% 112.68%

Asset 543,808 611,686 617,892 681,999 684,148

Debt / Asset 46.93% 48.98% 50.56% 53.17% 52.98%

Net Debt ＊ 227,035 273,421 283,402 338,593 337,242

Net Debt /Asset 41.75% 44.70% 45.87% 49.65% 49.29%

※IFRSs basis

Since 2009, CSC group have issued corporate bonds and signed syndicated bank loans for DSC’s expansion project

and overseas investments.

Performance- Historical EPS and dividends paid

11

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

83 85 84 85 87 85 85 87 88 Dividend payout(%)

85

(in NTD per share)

132

1.4

0

3.0

0 3.9

0

3.7

5

2.7

8

3.5

0

1.3

0

1.0

1 1.9

9

1.0

1

0.4

0

0.7

0

1.0

0

0.1

5

0.3

5

0.5

0

0.3

5

0.3

0

0.3

0

0.4

3

0.3

3

0.5

0

0.1

5

0.1

0

0.2

0

-

1.8

6

3.9

4

5.2

6

4.8

3

3.5

6

4.4

9

2.0

3

1.5

4

2.8

3

1.3

6

0.3

8

1.0

5

1.4

3

-

1.00

2.00

3.00

4.00

5.00

6.00

cash dividend stock dividend EPS

86 70

Cash Dividend payout(%)

75 76 74 78 78 78 64 66 70 74 105 67 70

Re-rolling

Bolts-nuts

Ship-building

Coil center

Piping

Vehicles

Hot-Rolled, 24.9% Cold-Rolled,

17.3%

Coated Products,

16.7%Plate, 10.5%

Bar/Rod, 20.8%

Billet/Slab , 9.8%

12

Sales (CSC standalone)

2015 CSC sales volume totaled 9.53 million metric tons

Export 32.64% (3.11 million metric tons)

Domestic/Export sales volume breakdown of 2015

Domestic 67.36% (6.42 million metric tons)

Japan 20.3% China 23.8%

S.E. Asia 33.9%

Others 22.0%

22%

18%

15%

15%

8%

7%

5%

4%

2%

2%

1%

1%

0% 5% 10% 15% 20% 25%

Direct users

Coil center

Bolts-nuts

Others

Re-rolling

Steel structure

Piping

Vehicles

Trader

Ship-building

Hand tools

Wire-rope

Re-rolling

Bolts-nuts

Ship-building

Coil center

Piping

Vehicles

Hot-Rolled, 45.1%

Cold-Rolled, 12.6%

Coated Products,

12.2%

Plate, 7.7%

Bar/Rod, 15.2%

Billet/Slab, 7.2%

13

Sales (CSC +DSC:HRC)

2015 sales volume (CSC & HRC of DSC) totaled 13.03 million metric tons Domestic/Export sales volume breakdown of 2015

Japan 20.6% China 18.4%

S.E. Asia 39.6%

Others 21.4%

Export 35.16% (4.58million metric tons)

Domestic 64.84% (8.45 million metric tons)

20% 17%

16%

15%

11%

7%

6%

3%

2%

1%

1%

1%

0% 5% 10% 15% 20% 25%

Re-rolling

Direct users

Others

Coil center

Bolts-nuts

Piping

Steel structure

Vehicles

Trader

Ship-building

Hand tools

Wire-rod

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Key strategies to achieve the vision

Secure self-sufficiency in raw materials through strategic upstream investment 3

Increase the supply chain value of steel-related industries by developing advanced products & technology and green manufacturing process

4

Enhance corporate culture handing-down, reinforce human resources training & development, and solidify plans for management succession

1

Enhance client relationships and networks through engineering, technical, and information management services

5

With the key strategies implemented, China Steel Corporation aims to become a trustworthy steel partner pursuing growth, environmental protection, energy saving and value-innovation

Strengthen sales channels through overseas investment 2

6 Implement cost reduction measures, enhance energy-saving & environmental protection, and strengthen workplace safety

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Strengthen sales channels through overseas investment

Malaysia

CSC Steel Sdn. Bhd.

CSC holds 46% of CSHB

Capacity: CR 0.60 mmt (CRC 0.36 mmt

including PO, GI 0.12 mmt, PPGI 0.12 mmt)

Vietnam

CSGT Metals Vietnam Joint Stock

Company

Vietnam

China Steel Sumikin Vietnam Joint

Stock Co. (CSVC) CSC holds 56% of CSVC

Capacity: 1.2 mmt (CR 0.5 mmt, GA/GI

0.3 mmt, ES 0.2 mmt, PO 0.2 mmt)

China

Maruichi Metal Product (Foshan) Co., Ltd

China

Changshu Baoshunchang Steel Processing

Co., Ltd

China

China Steel Precision Materials Corporation

CSC holds 70% of the equity interest

Capacity: 19,000 metric tones

Thailand

SB Coil Center

(Thailand) Ltd.

China

PCMI Metal Products (Chongqing) Co., Ltd

Italy

Ardemagni SpA

Overseas Investments of CSC group Co-invest in coil centers with peers and customers through China Steel Global Trading Co.

New Asia Project

China

Guangzhou Mayer Corp., Ltd

India

China Steel Corporation

India Pvt. Ltd. (CSCI)

CSC holds 100% of CSCI

Capacity: ES 0.2 mmt

China

Qingdao China Steel Precision Metal Co., Ltd

China

Xiamen Chunyuan Precision

Mechatronic Co., Ltd

Vietnam

Hanoi Steel Center Co., Ltd.

Malaysia

Tatt Giap Steel Centre

Sdn. Bhd.

Thailand

Thai Sumilox

Company Limited

Indonesia

PT MICS Steel Indonesia

Thailand

TSK Steel Co. Ltd.

China

United Steel Engineering and Construction

Co., Ltd (Kunshan coil center)

CSC holds 80% stake

India

Mahindra Auto Steel

Private Limited Co., Ltd

16

Secure self-sufficiency in raw materials through strategic upstream investment

Major raw materials

Iron ore and coking coals are secured by long-term contract

(volume)

Partner with parties in Japan, South Korea, Mainland China,

Australia and Brazil

Secure lime stone - acquired 39.04%(group shareholding) in Hsin

Hsin Cement

Semi-products

Secure supplies from strategic partnerships and JV’s

East Asia United Steel Corp.

NSSMC’s Wakayama plant as a reliable supply source for slab

Formosa Ho-Tinh Steel Corporation

As a mutual supply of hot-rolled and slab products.

Ferro-alloy

Long-term contract to reduce market risks

Purchased 5% stake in Dongbu Metal, Korea’s largest ferro-

alloys producer

Purchased 19% stake in Sakura Ferroalloys Sdn. Bhd.

Ensures a long-term stable supply of ferro-alloy, and lowers

the acquisition cost.

Semi-products Ferroalloy Major raw materials

East Asia United Corp.

Acquired 5% of Sonoma coal project (investment amount AUD$16.0mm)

Acquired 5% of Dongbu Metal Co ($47.8bn WON, approximately USD$43.9mm)

Coal & Iron ore

Acquired 0.41% of Congonhas Minerios company (investment amount NTD$2.74bn)

Iron

Acquired 25% (USD$1.11 bn) of Formosa Ha Tinh Steel Corporation

Acquired 39.04% of Hsin Hsin Cement for lime stone

Acquired 2.5% of Roy Hill iron ore project (investment amount AUD$315mm)

Acquired 3.68% of 2 subsidiaries of ArcelorMittal Mines Canada (investment amount USD$270mm)

Iron

Acquired 19% of Sakura Ferroalloys Sdn. Bhd.(USD$76.33mm)

Through an innovative

approach, ERCs

strategically focus R&D

effort on the need of

industries and implement

systemic, profound, and

comprehensive long-term

academic researches.

Electric Motor Technology ERC

Physical Properties & Microstructure of Metals ERC

Steel Structure ERC

Advanced Steel Microstructure Control ERC

High-value Metal Industry ERC

Next-Generation Hand Tool ERC

Advanced Special Alloy ERC

Forging Roll Forming ERC

To win trust and increase

business opportunities, CSC

establishes JRLs with

customers and strives to

enhance the suitability of

CSC materials with

customers’ manufacturing

processes.

Compressor and Motor JRL

Auto Steel JRL(HAITEC, MIRDC)

Motor JRL

Auto Application JRL

Auto Steel JRL(Engley, Honley)

CSC forms alliances with

customers to improve

international marketing and

service capabilities.

Taiwan Elite Handtool Organization

Alliance for the fastener industry (under planning)

Increase the supply chain value of steel-related industries by developing

advanced products and technology and green manufacturing process

Engineering Research

Center

(ERC)

Joint Research

Laboratory

(JRL)

Alliance for Steel

Industries

17

18

Enhance client relationships and networks through engineering,

technical, and information management services

Others

Domestic and oversea consulting services regarding environmental protection and energy saving

Customer services

Real-time information services of order status

Applied technology services

Early vender involvement

Engineering and Technical services

Plant Construction

Technical Consulting

Environmental Engineering

Railway and Rapid Transit System Engineering

Industrial Air Conditioner

Implement cost reduction measures, enhance energy-saving & environmental protection, and strengthen workplace safety

Cost Reduction Performance

• 1.53 bn: Expense saving from nationalization of equipment and spare parts

• 0.79 bn: Reduction of raw material procurement cost through negotiation and spot transaction

• 0.78 bn: Provide saturated steam and industrial gas to nearby plants

• 0.84 bn: Use of low cost raw material and reduction of fuel cost for blast furnace

• 0.26 bn: Establishment of On-line Monitoring System and automatic quality inspection system/Improvement of manufacturing process

2015

4.84 billion NTD

• 1.14 bn: Use of low cost raw material and reduction of procurement cost through negotiation

• 1.81 bn: Energy saving/ Provide saturated steam and industrial gas to nearby plants

• 0.70 bn: Expense saving from nationalization of equipment, replacement parts and spare parts

• 0.24 bn: Establishment of Facility On-line Monitoring and diagnosis System and automatic control systems

2014

4.39 billion NTD

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